HOME Investment Partnerships Program

2015

City of Tucson

Procedural Manual

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HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME)

The HOME program was created under Title 11 (the Home Investment Partnerships

Act) of the Cranston-Gonzales National Affordable Housing Act of 1990. This

program represented a historic affirmation of the Federal Government's commitment to

providing decent, safe, and affordable housing for all Americans and to alleviating the

problems of excessive rent burdens, homelessness, and deteriorating housing stock

nationwide.

Top Priority for State of Arizona LIHTC Awardees

In order to support those eligible projects that produce the most benefit for the Tucson

community – aside from the production and/or retention of affordable housing units,

representing the significant cash investment and the ancillary addition of job

opportunities – the ‘highest priority’ will be assigned to those successful LIHTC projects

during each HOME fiscal year.

Eligible HOME activities

include:

Homeowner

Rehabilitation

First Time

Homebuyer

Tenant Based Rental Assistance

Rental Production (New Construction/Rehabilitation/Re-Purpose)

Further, HOME funds are set aside for use by CHDOs (Community Housing

Development Organization). CHDOs are nonprofit organizations certified as meeting the

federal criteria to undertake certain housing development activities. Those activities

include acquisition and/or rehabilitation of rental housing and homebuyer properties

or to construct rental or homebuyer properties. CHDOs must act as Owner, Developer

or Sponsor. Additional guidance on the use of CHDOs is provided in HUD CPD

Notice 97-11, CPD Notice 97-09, and CPD Notice 96-09. The Code of Federal

Regulations contains regulatory guidance on CHDOs at 24 CFR §§ 92.2 and 92.300-303.

(See additional information on CHDOs on Page 12).

Affordability Periods for HOME Activities

Investment of HOME funds into a homeownership project requires an affordability

period be attached to that home. The affordability period represents the minimum

length of time a homeowner must reside in the property as his/her primary residence.

The affordability period begins after project completion. The periods are based on the

amount of HOME funds provided for the property. When the homebuyer sells or fails

to reside in the property as his/her primary residence during the affordability periods,

repayment of a portion of the HOME subsidy is required.

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Homeownership Assistance

Activities

HOME amount per-unit

Minimum period of affordability

Under $15,000 5 years

$15,000 to $40,000 10 years

> $40,000 15 years

Production, rehabilitation or acquisition of rental housing also requires an affordability

period to ensure that the housing remain affordable for low to moderate income people.

The affordability periods represent the minimum length of time (beginning upon project

completion) a recipient of HOME assistance must be in compliance with HOME rules

and regulations regarding maximum HOME rent limits, tenant income, and other

applicable requirements. The periods are based on the amount of HOME funds

provided for the property. When the recipient fails to comply with the HOME

regulations during the designated affordability period, repayment of the HOME

subsidy is required.

Activity HOME Subsidy Unit Must Remain

Affordable for at Least

Rehabilitation or Acquisition of existing housing

Less than $15,000/unit 5 years

$15,000-$40,000/unit 10 years

> $40,000/unit 15 years

Rehabilitation with refinancing

Any amount 15 years

New Construction or Acquisition of New Housing

Any amount 20 years

Minimum/Maximum Investment Amounts

Minimum HOME investment: The minimum amount of HOME funds is an average

of $1,000 multiplied by the number of HOME-assisted units in a project. The minimum

only applies to the HOME funds in a project, and does not include any other funds.

Maximum HOME investment: The maximum per-unit HOME subsidy varies and is

determined by HUD based upon Section 221(d)(3) program limits for the metropolitan

area each year.

It is important to note that HOME funds are intended to serve as true ‘gap’ funding, that

is to reasonably fill the gap created as a result of primary financing and equity funds

falling short of the total construction costs needed to complete a project. In most cases, it

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is desirable to cap gap funding at 2% of the total project costs. This cap may be exceeded

in special circumstances, as determined by the Director.

HOME Subsidy Layering Policy

Applicants seeking to combine HOME funds from City/County Consortium with

other governmental funds for a project must undergo a subsidy layering review to

demonstrate that the project will not use more HOME funding than necessary to

provide affordable housing. Subsidy layering reviews are available from the following

three sources:

1) Evaluation produced by HUD when the other source of funding is provided by

HUD, and HUD conducts a subsidy layering review;

2) Evaluation produced by state tax credit agencies when the Low Income

Housing Tax Credit is used, and the state agency conducts an evaluation to

determine whether there are excess tax subsidies;

3) Evaluation produced by the C i t y o f T u c s o n H o u s i n g a n d

Community Development Division in accordance with the guidelines presented

in HUD Notice CPD-98-01 and as described below:

HOME Subsidy Layering Guidelines

Based on the certification contained in the annual submission of the consolidated plan and

the subsidy layering provisions of section 92.250 (b) of the HOME final rule,

the City of Tucson’s Planning and Community Development Division uses the

guidelines it has adopted to document that when HOME funds are used in

combination with funds from other sources, no more subsidy is invested than is

necessary. The Division may rely upon the guidelines developed and/or evaluations

conducted by other agencies when Low Income Housing Tax Credits (LIHTC) or

other HUD program funding (conducted in accordance with section 102 (d) of the HUD

Reform Act) are used.

Applicants seeking HOME funds are required to submit to the City of Tucson

Planning and Community Development Division a HOME Investment Partnership ‘Pre-

Application’ summarizing the key points of the proposed project. If it is determined that

the specifics and community goals are consistent with the City’s goals, the applicant(s) will

be invited to submit the formal City of Tucson HOME Investment Partnership Application

for consideration and eventual underwriting. The Application consists of the following:

1. The City of Tucson HOME application, which is available at:

http://hcd.tucsonaz.gov/hcd/affordable-housing-opportunities

2. Commitment letters with all terms and conditions for the following:

o Mortgages

o Grants and/or other governmental assistance

o Subordination agreements

o Bridge (interim) loans

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o Investment tax credits (historical, low-income, if applicable)

3. Copy of partnership agreement (if the applicant is a partnership), which indicates

the cash contributions by the general partners and/or limited partners

Note: The proceeds from the sale of tax credits must be identified as a source of funding.

Documentation to verify the sources indicated in the Template including:

Earnest money agreement, option or closing statement for land and/or buildings

Construction cost estimate

Construction contract or preliminary bids

Agreements governing the various reserves which are capitalized at closing (to verify that

the reserves cannot be withdrawn later as fees or distributions)

Appraisal (to substantiate the value of land and property after rehabilitation/

construction)

If low-income housing tax credits are utilized, documentation on the

syndication costs (legal, accounting, tax opinion, etc.) from the organization

/individual who will syndicate and sell the offering to ensure that the project can

support the fees necessary to syndicate/fund the project. All assumptions in the

offering should be verified in the supporting documentation.

If the documentation is not adequate and does not support the costs as stated, the City

will request additional documentation or a second opinion and/or reference from an

appropriate source, such as another construction cost estimator, architect, or lawyer.

When required documentation cannot be obtained, the City may deny HOME funding for

the project.

Evaluation Criteria

Proposals will be reviewed scored on a competitive basis relative to the evaluation

criteria below. The maximum possible score is 100 points.

A. Serving Priority Population (10 points). Applicant will receive up to 10

additional points if it serves one or more of the following groups: veterans,

disabled, victims of domestic violence, special conditions or special needs groups

as identified in the current Consolidated Plan.

B. Smart Growth (15 points). Applicant will receive up to 15 points for projects

with the following range of ‘smart growth’ characteristics:

1. Proximity to Existing Development and Infrastructure:

Walking distance to transit – 5 points max as noted below:

o Adjacent = 5 points

o < 1/3 mile = 4 points

o 1/3 – 1/2 mile = 3points

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o < ½ mile to 1 mile = 2 points

2. Proximity to any of the following – 5 points max as noted below:

Grocery store/local markets, convenience retail/services, schools, daycare, recreation

centers, employment center:

o Adjacent = 5 points

o < 1/3 mile = 4 points

o 1/3 – 1/2 mile = 3points

o < ½ mile to 1 mile = 2 points

3. Community Context and Site Design: 5 points max as noted below:

Demonstrate use of existing styles, building types in neighborhood

Building reflects local historic elements, materials, style and/or design

Scale and mass of buildings relate to neighborhood structures

Continuation of existing neighborhood street pattern into new project

Create or enhance community spaces such as plazas, squares, community buildings

and other common areas of the development

C. Healthy Communities Elements (10 points). Healthy living components are

incorporated into the project which may include but are not limited to:

Build, incorporate and/or maintain adequate sidewalks/paved paths

Provide direct street connections - front doors with well-marked walk-ways,

paths/paseos between rear-parking and street

Locate parking facilities behind the building

Facilitate connections to existing or planned parks/amenities/open space,

including “complete streets” type design – with paths clearly-marked and

maintained

Facilitate choices in transportation modes - provide bike racks, bike lockers,

bike path access and information, paths to bus stops, post bus information

on-site

Wellness clinic/classes or mobile clinic on site or adjacent

Healthy food choices available within ½ (or ¼) to a mile of the site (fresh

food markets/grocery stores)

Recreational facilities or activities available on site or adjacent

Discounts for health club memberships

Community garden(s) on site or within ¼ mile

a ‘Desktop’ Health Impact Assessment (HIA) completed

D. Impact on Designated City/County Target Areas (10 points). The project is

located within one of the City’s Community Development Target Areas or within

Pima County’s NSP2 or CDBG Target Areas (including Colonias Communities).

E. Leveraging of Funds (20 points). Applicant will be awarded points based upon

the ratio of County funds requested and previously committed compared with

other funding included in the total project budget. Points will be awarded as

follows:

a. 20 points = 50% or more of the project is leveraged

b. 15 points = 40-49% of the project is leveraged

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c. 10 points = 20-39% of the project is leveraged

d. 5 points = 10-19% of the project is leveraged

e. 0 points = Less than 10% of the project is leveraged F. USGBC LEED Certified Project (10 points). Ten points will be awarded for any

level of certification. *An alternate independent third party rating system may be

proposed which will be reviewed and approved at sole discretion of City or County

staff. An applicant may also propose to follow the green building standards

provided by the Arizona Department of Housing’s funding applications so long as a

certified independent third party certifies compliance with the state’s criteria.

Will green building techniques be utilized (Regional Green Building Rating

System, Energy Star, LEED or Net Zero Certification)? Will it be a high energy

efficient performing home? Does the design of the structure embrace elements from

the surrounding environment, both built and natural?

G. Innovative Partnerships (10 points). Partnerships such as non-profit/for profit; 2

or more non-profits; government/private entity; or multiple government entities. In

all cases partnerships must be approved, in writing, by the respective governing

boards/bodies of the partnering entities.

H. Use of Local Contractors/Sub-Contractors (5 points). When general contractor

and all subcontractors used for the project are based in Tucson and/or Pima County,

5 points will be awarded. Partial points may be awarded if general contractor or

subcontractors are based in Pima County.

I. Acquisition/Rehabilitation Projects (5 points). Five points will be awarded for

acquisition and rehabilitation of existing single family or multi-family housing.

J. Mixed Use Development (5 points). Five points will be awarded for a mixed use

development (commercial/retail and residential).

All points will be awarded on a full point basis. If information is not contained in

application or not sufficient, points will not be awarded. Projects must score a minimum

of 70 points to be eligible for funding. The number of awards will be determined by the

number of qualifying Proposers and the amounts requested by each. Award amounts may

not be equal to the full amount requested in the proposal.

Review of Project Budget: The project development budget, as presented in the

Template, will be evaluated to determine if development costs are necessary and

reasonable. The review will ensure that the costs being funded by the HOME Program

are eligible costs and the HOME funds per unit do not exceed the maximum per-unit

subsidy limits. Reasonable costs are defined in OMB Circular A‐87 as follows: A cost is reasonable

if, in its nature and amount, it does not exceed that which would be incurred by a

prudent person under the circumstances prevailing at the time the decision was made to

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incur the cost.

Federal regulations require that projects involving land acquisition be supported by an

appraisal documenting the current land value. Any upward deviation from the appraised

value necessitates written justification explaining how the cost meets the “necessary and

reasonable” test in OMB Circular A‐87. Rate of Return on Equity: The project Template information will be reviewed to

determine the reasonableness of the rate of return on equity investment and/or to

determine whether the cash flow projections are reasonable paying particular attention to

current economic conditions.

Market Study: The Proposal should contain documentation that demonstrates a need

for the development in the community. The developer should provide evidence that the

market has been evaluated and it is determined that sufficient demand exists to support

the proposed number of units.

Overall Evaluation: If the City determines that the total amount of HOME assistance

and other governmental assistance exceeds the amount that the City determines is

necessary to make the project feasible due to the unreasonableness of the costs and/or

the projected rate of return, the City can consider several options:

1) Reduce the amount of HOME assistance through reducing the development

budget accordingly or increasing the non-public funding of the project;

2) Make other adjustments to the project, such as lowering the rents to be

charged, reduce the term of the loan in order to lower the rate of return; or

3) Deny HOME assistance if the applicant refuses to make reasonable

adjustments or to limit its return/costs.

The Key Evaluation Points referenced above pertain to single-family rental housing of

1 to 4 units as well as multi-family rental housing. However, if the rental project is

owner-occupied and the owner’s unit is being rehabilitated with Federal funds, the

rental income and rehabilitation expenses applicable to the owner’s unit must be

excluded from the pro-forma evaluations.

Rent and Occupancy Requirements

HOME distinguishes between the units in a project that have been assisted with

HOME funds and those that have not. A project may consist of a unit with various sizes

and amenities, some of which may be HOME-assisted, while others are not. HOME-

assisted units is a term that refers to the units within a HOME project for which rent,

occupancy and/or resale restrictions apply. The number of units designed as HOME-

assisted affects the maximum HOME subsidies that may be provided to a project.

Every HOME-assisted rental unit is subject to rent limits designed to help make rents

affordable to low-income households. These maximum rents are referred to as

“HOME rents.” HUD publishes the rent schedule each year based on changes in area

income levels or market conditions.

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For properties with both assisted and non-assisted units, there must be a designation of

“fixed” or “floating” units. Fixed units are the specific units that are HOME-assisted

that are designed at the time of project commitment. These units never change and are

subject to HOME rents and occupancy standards. Floating units are units that are

HOME-assisted, but may change over time. The total number of HOME-assisted units

remains constant over time, and all floating units are subject to HOME rents and

occupancy standards.

Income Eligibility Standards

The City of Tucson/Pima County uses the Adjusted Gross Income method of

calculating annual income for HOME program participants. Projects receiving HOME

funds must follow this method in the determination of participant eligibility in

HOME-assisted housing units. Properties with multilayered financing such as Tax

Credits will be allowed to use the Section 8 definition as prescribed by HUD.

Rental projects subsidized by the HOME Program must comply with the Program

Funds Rule and the Project Rule, as established by the U.S. Department of Housing and

Urban Development. The Program Funds Rule states that 90% of the total households

assisted (HOME subsidized units) must have incomes that do not exceed 60% of the

Area Median Income (AMI). The Project Rule specifies the occupancy of units in

each rental project. In projects of 5 or more HOME-assisted units, at least 20% of the

HOME assisted units must be occupied by families who have annual incomes that are

50% or less of the AMI (Low Home Rent Units). Projects with fewer than 5 HOME-

assisted units do not have to restrict any units to Low HOME Rents or limit occupancy to

tenants at 50% or below of the AMI.

HUD provides an online income calculation tool that project owners may use to

determine income eligibility of tenants. It can be found at

https://www.onecpd.info/incomecalculator/

Other HOME Requirements

Minimum Property Standards (Construction, Rehabilitation and Acquisition)

All HOME-assisted units must meet local codes and standards. In the absence of local

codes, housing should conform to the model codes identified in the program rule at 24

CFR Part 92.251.

Minority and Women’s Business Enterprises

The requirements of Executive Orders 11625, 12432, 12138 and 24 CFR 85.36(e)

applies to grants under this part. Consistent with HUD’s responsibilities under these

Orders, the Applicant must make efforts to encourage the use of minority and women’s

business enterprises in connection with funded activities.

Section 3

Section 3 of the Housing Development Act of 1968 will apply as amended (12 U.S.C.

1701U), relative to the hiring and training of low-and moderate-income persons and

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the use of local Section 3 certified businesses. The purpose of Section 3 is to ensure

that the employment and other economic opportunities generated as a result of U.S.

HUD assistance or by a U.S. HUD- assisted project covered by Section 3, shall to the

greatest extent feasible, be directed to low-and very-low income persons, particularly

persons who are recipients of U.S. HUD housing assistance.

Labor Standards

Construction (rehabilitation or new construction) of housing that includes 12 or

more units assisted with HOME funds requires the payment of prevailing wages for the

area to all laborers and mechanics employed in the development of any part of the

housing. This also applies to homebuyer projects that do not include other project

activities.

When HOME funds are only used to assist homebuyers to acquire single-family housing,

and not for any other project costs, the wage provision applies to the construction of the

housing if there is a written agreement with the owner or developer of the housing that

HOME funds will be used to assist homebuyers to buy the housing units to be purchased

with HOME assistance.

Contractors and subcontractors must comply with Federal laws and regulations

regarding labor standards and the HUD Handbook 1344.1 (Federal Labor Standard

Compliance in Housing and Community Development Programs) as applicable to the

project.

The prevailing wage provisions do not apply to volunteers who receive no compensation

and are not otherwise employed at any time in the construction work. The provisions

also do not apply to members of a family providing labor in exchange for

acquisition of property for homeownership or in lieu of, or as a supplement to, rent

payments. For more information about labor standards, see 24 CFR 92.354.

Environmental Review

The environmental effects of each activity carried out with HOME funds must be

assessed in accordance with the provisions of the National Environmental Policy Act of

1969 (NEPA) and related authorities listed in HUD’s implementing regulations at 24

CFR Parts 50 and 58.

Construction must NOT commence and funds will NOT be disbursed for a project

until the environmental review has been completed. .

Flood Insurance

Under the Flood Disaster Protection Act of 1973 (U.S.C. 4001-5128) HOME funds may

not be used with respect to the acquisition, new construction, or rehabilitation of a

project located in an area identified by the Federal Emergency Management Agency

(FEMA) as having special flood hazards, unless:

The community in which the project is situated is participating in the National

Flood Insurance Program (44 CFR Parts 57-59) or

Flood Insurance is obtained as a condition of approval or commitment.

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Accessibility

The Applicant must comply with the applicable provisions of the Americans with

Disabilities Act (42 U.S.C. 12101-12213) and assist the City with complying with

the implementing regulations at 28 CFR part 35. All new construction housing

developments receiving HOME subsidies with 5 or more units must design and

construct 5 percent of the dwelling units, or at least one unit, whichever is greater, to be

accessible for persons with mobility disabilities. These units must be constructed in

accordance with the Uniform Federal Accessibility Standards (UFAS) or a standard that

is equivalent or stricter. An additional 2% of the dwelling units, or at least one unit,

whichever is greater, must be accessible for persons with hearing or visual

disabilities.

For more information on the accessibility requirements for federally assisted new

construction and substantial alterations of existing federally assisted housing, refer to

Section 504: Disability Rights in HUD Programs.

Affirmative Marketing Guidelines

Rental and homebuyer projects containing five or more HOME-assisted units are

required to comply with affirmative marketing procedures. Owners of projects must

inform and solicit applications from persons in the housing market areas who are

least likely to apply for the housing without the benefit of special outreach.

Applicants must include a description of how the project plans to inform the public,

owners, and potential tenants about their affirmative marketing policy and the Federal fair

housing laws and a statement of procedures used by owners to inform and solicit

applications from persons in the housing market areas who are least likely to apply for

the housing without special outreach.

Lead-Based Paint Evaluation Procedures

The U.S. Department of Housing and Urban Development (HUD) implemented a

regulation to protect young children from lead-based paint hazards in housing that is

financially assisted by the federal government or being sold by the government. The

“Lead Safe Housing Rule” (Requirements for Notification, Evaluation and Reduction of

Lead-Based Paint Hazards in Federally Owned Residential Property and Housing

Receiving Federal Assistance), was published in the Federal Register on September 15,

1999.

The regulation sets hazard reduction requirements that give greater emphasis than

previous regulations to reducing lead in house dust. This regulation requires dust

testing after paint is disturbed to make sure the home is lead-safe.

Specific requirements depend on whether the housing is being disposed of or assisted

by the federal government, and also on the type and amount of financial assistance,

the age of the structure, and whether the dwelling is rental or owner-occupied. For

additional information visit the HUD website at www.hud.gov/lead/training/index.cfm

The Will County CD Division continues its alliance with the Will County Center for

Community Concerns through a formal Letter of Agreement. The Agreement sets forth

the Lead-Based Paint Inspection Protocol, which assures the prospective tenant or home

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buyer that the home is lead- based paint free or has been stabilized. The following lead

based paint protocol is followed by inspectors to ensure no housing units are occupied

containing lead-based paint hazards:

Lead Visual Assessment Training. The inspector visits HUD’s lead website www.hud.gov/lead and reviews all visual lead information. All inspectors

have also successfully completed the state’s required 3rd

party examination and are licensed inspectors/risk assessors.

Uniform Relocation Act

The Uniform Act, passed by Congress in 1970, is a federal law that establishes

minimum standards for federally funded programs and projects that require the

acquisition of real property (real estate) or displacement of persons from their homes,

businesses, or farms. The Uniform Act’s protections and assistance apply to the

acquisition, rehabilitation, or demolition of real property for federal or federally funded

projects. The Applicant agrees to adhere to 49 CFR Part 24 for HUD funded programs

and projects.

Conflict of Interest Provisions

Applicants must guarantee that no member of, or Delegate to, the Congress of the

United States shall be admitted to any share or part of a contract or to any benefit to

arise from the same. Additionally, the Applicant must agree that no members of the

governing body of the locality in which the Project Sponsor is situated, no other public

official of such locality or localities, and no person, unless expressly permitted by HUD,

who is an employee, agent, consultant, officer, or elected or appointed official of the

Applicant, and who exercises or has exercised any functions or responsibilities with

respect to HOME-assisted activities, or who is in a position to participate in a decision

making process or gain inside information with regard to such activities, may obtain a

financial interest or benefit from the HOME-assisted activity, or have any interest in

any contract, subcontract, or agreement with respect thereto, o with respect to the

proceeds there under, either for himself or herself or for those with whom he or she has

family or business ties, during his or her tenure or for one (1) year thereafter.

The Applicant agrees that the codes of conduct provisions in 24 CFR § 84.42 shall

apply to the procurement of supplies, equipment, construction and services. In all cases

not governed by 24 CFR § 84.42, the provisions of 24 CFR § 92.356 shall apply. Such

cases include the acquisition and disposition of real property and the provision of

assistance by the Applicant or assistants of the Applicant to individuals, businesses, and

other private entities under eligible activities that authorize such assistance (e.g.

rehabilitation, preservation, and other improvements of private properties or facilities

pursuant to 24 CFR 92).

The Applicant represents that it presently has no interest, and shall not acquire such

interest, financial or otherwise, direct or indirect, nor engage in any business transaction

or professional activity or incur any obligation of any nature which would conflict in

any manner with the performance of scope of service required hereunder.

Without receiving prior written authorization by the City, the Applicant shall not (i) retain

any individual or company with whom the Applicant or any individual member thereof

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has a financial or other conflict of interest; nor (ii) in fulfillment of this Agreement, do

business with a for-profit entity in which the Applicant or any individual member has a

financial or other interest therein.

The Applicant warrants to the City that no gifts or gratuities have been or will be given to

any City employee or agent, either directly or indirectly to obtain this Agreement.

SET ASIDES Through HOME the federal government invests in local nonprofit housing groups by

requiring that each jurisdiction reserve at least 15 percent of its total HOME allocation to

fund housing that will be owned, developed, or sponsored by entities designated as

Community Housing Development Organizations (CHDOs).

Community Housing Development Organizations (CHDOs)

CHDOs, which are not-for-profit organizations that are rooted in and accountable to the

neighborhoods they serve, embody the idea of community-led revitalization that

HOME and other US Housing and Urban Development (HUD) programs are designed to

promote.

CHDO Requirements

A CHDO is a specific type of private nonprofit entity. CHDOs must meet certain requirements pertaining to their legal status; organizational structure; and capacity and experience. HUD Notice CPD 97-11, located at http://www.hud.gov/offices/cpd/lawsregs/notices/1997/97-11.pdf, details these requirements as does 24 CFR Part 92. An overview of these requirements is provided below.

Legal Status: The 501 (c) nonprofit must be organized under state/local law, must

identify decent affordable housing as a purpose of its existence, there must be no

individual benefit from earnings, and it must have a clearly defined service area.

Organizational Structure: At least one-third of its board of directors must be low-

income residents, reside in a low-income area, or serve as an elected representative of

the low-income community and no more than one-third may be public officials or

employees of Will County.

The CHDO must additionally provide a formal process for input from the low-income

community.

Capacity and Experience: The CHDO must demonstrate that it has at least one year of

experience serving the community where it intends to develop the housing and that its

staff has the capacity to carry out the proposed activities. The CHDO must also have

financial accountability standards that conform to 24 CFR § 84.21, “Standards for

Financial Management Systems.”

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CHDO Role

CHDO set-aside funds may be used by CHDOs for those HOME activities where the CHDO acts as the owner, developer, and/or sponsor of the housing. Each role is described below.

Owner: The CHDO is an “owner” when it holds valid legal title to or has a long-term

99-year minimum) leasehold interest in a rental property. The CHDO may be an owner

with one or more individuals, corporations, partnerships or other legal entities.

Example: A CHDO owns a property and contracts with another entity (for-profit or

nonprofit) to act as a developer, and to construct new buildings or rehabilitate existing

building(s). After completion of the development, the CHDO will maintain ownership of

the property.

While the CHDO may be solely the owner, with another entity acting as a developer, it

may also be the owner and developer of its own project. The CHDO may own a

property in partnership with either a majority or minority interest. However, the

CHDO, in partnership with a wholly owned for-profit or nonprofit subsidiary, must be

the managing general partner with effective control (in decision-making authority) of the

project.

Developer: A CHDO is a "developer" when it (1) either owns a property and develops a

project, or has a contractual obligation to a property owner to develop a project; and (2)

performs all the functions typically expected of for-profit developers, and assumes all

the risks and rewards associated with being the project developer.

Sponsor: A CHDO is a “sponsor” for HOME-assisted rental or homebuyer housing

according to the circumstances outlined below. In either case, the CHDO must always

own the property prior to the development phase of the project.

For rental housing: The CHDO develops a project that it solely or partially owns and

agrees to convey ownership to a second nonprofit organization at a predetermined time.

The conveyance may take place prior to, during or upon completion of the development

phase. The other nonprofit will assume from the CHDO at a specified time all

HOME obligations (including repayment of loans and tenant and rent requirements)

for the project. If the property is not transferred to the nonprofit organization, the

CHDO sponsor will remain liable for the HOME obligations. The other nonprofit

organization must be financially and legally separate from the CHDO sponsor.

For home buyer’s program : The CHDO owns a property, then shifts responsibility for

the project to another nonprofit at some specified time in the development process. The

second nonprofit in turn transfers title, along with the HOME loan/grant obligations

and resale requirements, to a HOME-qualified homebuyer within a specified timeframe.

Applicants should stipulate in their request for funding their desire to either retain or

return CHDO proceeds, however, the decision will ultimately lie with the City. If the

CHDO desires to retain project proceeds, the proposal should specifically stipulate how

the funds will be used.

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Reporting Results

HUD reports program outcomes at a national level. The purpose for this reporting is to

demonstrate program results to policy makers and the public, to allow HUD and the

grantees to capture program accomplishments, to help enhance program capacity and

results, and to build public support for the funded programs. Because the group of

grantees and their activities are so diverse, data must be reported consistently so that it

can be nationally aggregated. HUD requires each activity funded by HOME to report on

standard objectives and outcomes. HOME project results will be most often reported in

terms of the number of households assisted with improved access to decent, affordable

housing. CHDOs will be responsible for reporting all required information to the City

prior to the closeout of any activity.